Calculation for different types of reserves

[Trevor]

Hi, I came across the 2013 September, Question 5iii.

We are asked to describe the reserves & their methods for a group IP contract.
My immediate instinct is that we are tested these parts of the notes:
Types of reserves - Chapter 21 Section 2.2
Reserving methods - Chapter 21 Section 3 (Case / Statistical estimate)

My approach was to list down all the relevant reserves for such product, and explain in one sentence how did that type of reserve arise.
In the notes, there are very little details on the calculation for each types of reserves; there is only a brief section on how to estimate the UPR, no description for other reserves types.

However in the solution for this, there are calculation descriptions for each type of reserves. Case/Statistical estimates were described only very briefly in the solution, a very minor part of the overall answer. (I thought describing case/statistical reserves would already score me half of the marks)

Can I know where to find the description for the other reserve calculations? I can't find these anywhere in the notes.
Are these details out of the 2021 syllabus? Or they are genuinely higher order questions requiring us to think on top of our feet?

Thanks,
Trevor

 

[Mark Willder]

Hi, I came across the 2013 September, Question 5iii.

We are asked to describe the reserves & their methods for a group IP contract.
My immediate instinct is that we are tested these parts of the notes:
Types of reserves - Chapter 21 Section 2.2
Reserving methods - Chapter 21 Section 3 (Case / Statistical estimate)

My approach was to list down all the relevant reserves for such product, and explain in one sentence how did that type of reserve arise.
In the notes, there are very little details on the calculation for each types of reserves; there is only a brief section on how to estimate the UPR, no description for other reserves types.

However in the solution for this, there are calculation descriptions for each type of reserves. Case/Statistical estimates were described only very briefly in the solution, a very minor part of the overall answer. (I thought describing case/statistical reserves would already score me half of the marks)

Can I know where to find the description for the other reserve calculations? I can't find these anywhere in the notes.
Are these details out of the 2021 syllabus? Or they are genuinely higher order questions requiring us to think on top of our feet?

Thanks,
Trevor

Hi Trevor

It looks like you had the right approach with this question. The solution does talk about case estimates versus statistical estimates as it goes through each reserve.

Hopefully most of the reserves are familiar from the earlier subjects, eg calculating policy reserves as the expected value of claims / expenses less premiums, or using run off triangles where there are reporting delays, guarantees can be costed using methods similar to derivative pricing. So I don't think that anything in the solution should come as a surprise, but you do need to pull ideas together from various parts of the course (and other courses).

Best wishes

Mark